A Decrease in Demand and an Increase in Supply Will

question 16

Multiple Choice

A decrease in demand and an increase in supply will lead to

• A) unambiguous increases in both price and quantity.
• B) unambiguous decreases in both price and quantity.
• C) an unambiguous decrease in price, but the effect on quantity is indeterminate.
• D) an unambiguous decrease in quantity, but the effect on price is indeterminate.

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Definitions:

Laissez-Faire Economy

An economic system in which transactions between private parties are free from government intervention such as regulations, privileges, tariffs, and subsidies.

Coordinating Mechanism

A system or process used to organize and harmonize different activities or parties so that they work together efficiently towards a common goal.

Laissez-Faire Economies

Economic systems in which transactions between private parties are free from government intervention such as regulations, privileges, tariffs, and subsidies.

Command Economies

Economic systems where government decisions rather than market mechanisms primarily dictate production, allocation, and prices of goods and services.